Japan's Renesas pushes into autos with $3.2 billion Intersil buy

Tue Sep 13, 2016 8:47pm EDT
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By Makiko Yamazaki

TOKYO (Reuters) - Renesas Electronics Corp (6723.T: Quote) on Tuesday said it has agreed to buy U.S. chipmaker Intersil Corp ISIL.O for $3.2 billion, an all-cash deal that bolsters the Japanese group's efforts to refocus the company around automotive chips.

Slowing growth in computers and smartphones - the traditional mainstays of the chip industry - has fueled a wave of mergers globally as chipmakers turn to areas such as auto electronics for sales growth.

Renesas, created from the semiconductor units of several Japanese companies, has amassed a significant war chest since a state fund and key clients bailed it out after the Fukushima earthquake five years ago.

"It was a competitive bid and we settled at a price almost at the maximum limit," Renesas CEO Bunsei Kure told a briefing for reporters and analysts in Tokyo.

"We can combine our products and offer them in a package," he added, saying the chipmaker would "actively seek out other mergers" to further grow its business.

Kure's company paid $22.5 a share for Intersil, 14 percent above Monday's closing price.

"They might be over-paying just a little, but if Renesas doesn't buy Intersil they will struggle to supply customers in the U.S.," said a manager at an investment fund in Singapore that owns Renesas shares.

"If they want to be a top auto-industry component maker they have to do this," he added, asking not to be identified because he was not authorized to talk to the media.   Continued...

The logo of Renesas Electronics Corp is pictured at the company's headquarters in Tokyo, Japan, in this December 21, 2015 file photo.  REUTERS/Toru Hanai/File Photo